Malaysia did credible job on income disparity: MARC

KUALA LUMPUR: Malaysia has done a relatively credible job in improving overall income disparity, with a lower Gini Coefficient than some advanced economies such as Singapore (0.458) and Hong Kong (0.539).

In its review of the on the latest Household Income and Basic Amenities survey (2016) released by the Department of Statistics, Malaysian Rating Corporation Bhd (MARC) further said the overall income distribution has also marginally improved

"This is reflected by the country’s Gini Coefficient of 0.399, down from 0.401 registered in the preceding two-year period," the ratings agency said in a statement yesterday.

Gini Coefficient is a measure of statistical dispersion of income or wealth distribution of a nation's residents and most commonly used measure of inequality.

Further, MARC also noted that Malaysia’s median and mean household incomes continued to grow, benefitting from the relatively resilient domestic economy.

It said the incidence of poverty has declined significantly, with the poverty rate slipping further by 0.2 percentage point to 0.4% from 0.6% in 2014.

"To a certain extent, this can be attributed to income transfers from the government which directly benefitted the B40 income group," MARC report said.

Notwithstanding these, MARC said it is also noteworthy that both the median and mean monthly household incomes growth have slowed from the pace recorded in the previous survey (11.7% and 10.3% respectively in the 2012-2014 survey).

Alongside the latest release of Malaysia’s Household Expenditure survey, MARC estimates that the average monthly household excess income grew at a slower pace of 6.6% in 2016 from a cyclical high of 7.7% in 2013.

Similarly, on an inflation adjusted basis, the growth of monthly household excess income moderated to 6.6% during the same period, down from an average of 7.1% in the three-year period through 2015.

"This has reinforced our view that consumers have been cautious in their spending habits amid a challenging economic environment as well as rising costs of living," the agency said.

Not surprisingly, private consumption growth has been subdued, averaging at 6.3% between 2014 and 2016, down from 7.5% in the preceding three-year period, MARC report said.